Don't raise gas tax without reforms

March 13, 2007|By Thomas A. Firey

Maryland Senate President Thomas V. Mike Miller has become the highest-ranking state official to call for an increase in the state's gas tax.

This month, Mr. Miller placed in the Annapolis hopper a bill to raise the gas tax by just over 50 percent, to 35.5 cents a gallon - which would make it the fourth-highest in the nation - with the new revenue going to transportation projects. Mr. Miller's bill joins similar legislation by Montgomery County Del. Sheila E. Hixson, who wants a slightly smaller increase, to 33.5 cents a gallon.

"It's going to be tough for some people," Mr. Miller said of the gas tax hike and other tax increases and budget cuts he claims are necessary, "but they're going to have to suck it up and move forward for the good of the state of Maryland."

There is some merit to Mr. Miller and Ms. Hixson's proposals. Maryland's roadways have been underfunded for more than a decade, first by the transportation-unfriendly Glendening administration and then by the cash-strapped Ehrlich administration. But if Marylanders must, in Senator Miller's words, "suck it up," lawmakers should do the same by ending the corporate welfare and cutting the pork-barrel spending that the state forces motorists to finance.

From the millions of dollars that Maryland is paying British Airways (as reported in The Sun last October) to keep the global carrier at BWI Marshall Airport to all the gas tax dollars that go to the D.C. Metro and other transit systems that move relatively few people at extremely high cost, transportation trust fund money is being channeled away from the roadways and other heavily used transportation systems that need support.

The gas tax, in theory, is a good mechanism for funding roadways because drivers are taxed according to their usage: The more you drive, the more gas you buy and the more tax you pay. But the value of gas tax revenue has fallen over the years because of inflation and improved vehicle gas mileage. The result is that we're paying less for road maintenance in real terms per each roadway-damaging vehicle mile that we drive.

And those aren't the only reasons Maryland's transportation trust fund isn't maintaining the state's once high-quality roadway system. Maryland officials have a passion for spending trust fund money on dubious "prestige" transportation projects, such as the hyper-expensive Metro heavy rail, that have high publicity value but make little sense from a public policy perspective.

Motorists should be angry about the questionable use of the transportation fund, but they should be outraged by the corporate welfare that politicians in Annapolis hand out to gas retailers. Consider the state's 1974 "mandatory middleman" law, which prohibits oil companies from selling motor fuel directly to consumers. Instead, sales must be made through middlemen, such as franchised retailers. The result is a double markup on gasoline, so that oil companies and middlemen can profit on sales at the expense of motorists.

In 2002, Annapolis passed an "unfair price" law prohibiting retailers from selling motor fuels below state-established minimum prices unless the retailers can prove that their prices aren't "unfairly low." Designed to rein in gasoline discounters such as convenience stores and shoppers' clubs, the law dampens price competition and further pads gasoline profits.

Both of these laws are routinely defended by legislators as necessary to protect "the little guy" - meaning the businessmen who own gas stations. Curiously, the politicians make no mention of the effect these laws have on that other little guy, the motorist.

If Maryland motorists must sacrifice by paying higher gas taxes, they should demand that Annapolis make better use of the transportation fund money and reduce the corporate welfare that the state hands out to politically favored businesses.

No doubt such reforms would lead to reduced campaign contributions for Maryland politicians. But perhaps the politicians should also "suck it up" for the good of the state.

Thomas A. Firey is a policy scholar at the Cato Institute. His e-mail is tfirey@cato.org.